State Aid: good news for local schemes?

Inseven recent cases the European Commission has placed emphasis on real, rather than hypothetical, impact of aid on cross-border trade. This may help local aid to be made without reference to the Commission where the authority can gather sufficient evidence to satisfy itself that there is no impact.

In seven recent cases, the European Commission has placed
emphasis on real, rather than hypothetical, impact of aid on
cross-border trade. This may help local aid to be made
without reference to the Commission where the authority can gather
sufficient evidence to satisfy itself that there is no impact.

The European Commission has sent out a press release covering seven decisions by
the Commission relating to individual decisions approving as
not aid a range of local schemes, on the basis that they do not
affect trade between member states.

The press release places considerable emphasis on the linkage to
the State aid modernisation programme and the need to reduce
bureaucracy and the burdens on the national authorities. At this
stage we have not seen the public versions of the full decision,
but the press release does give an outline of the basis of the
Commission's approach. The schemes are quite wide ranging and
include some where the matter arose from complaints. The schemes
covered are:

Public funding for emergency hospital services and
equipment in the Czech republic

Sub market rent for a local health clinic in Germany

Support for small business advisory services in Kiel

Underwriting losses in a rehabilitation clinic in
Germany

Port development in a small fishing harbour and marina in
Holland

Support of certification and other training for
mountain skills in Scotland

Approval of a beneficial tax regime for member
owned golf clubs in the UK

On the face of it, these decisions mark a welcome pragmatic
approach to small scale aid in local areas. However there is a
consistent theme in the decisions around not merely looking at
where the enterprise itself trades (e.g. the German Rehabilitation
clinic had only treated German residents in 2013), but also
considering the extent to which the aid might have an impact on
cross border investments in similar businesses.

In this context it is worth bearing in mind that in the past the
European courts have tended to take a more hard line approach.
Given that three of these decisions relate to healthcare it may be
worth bearing in mind that in Heiser, C-172/03, the ECJ
held that there was scope for affecting trade between member
states in a case involving a sole practitioner Dentist. Similarly
in the recent (and ongoing) case of IRIS-H (SA.19864 (2014/C)
involving funding for Belgian hospitals the commissions
position in relation to this point was that "health care in
general and inpatient healthcare provided by hospitals in
particular is subject to intra EU trade".

The key in these recent seven cases appears to be that (at
least at the Commission stage) there was consideration of the
impact on cross border trade, on a realistic rather than a
hypothetical basis. However, whilst this may facilitate local aid
being made without reference to the Commission it does place a
greater burden of gathering evidence and reviewing the risks on the
public authority making the Grant. Does this industry have cross
border trade – if so is there likely to be a problem in relying on
these decisions to justify a 'no effect on trade' argument?

If you can demonstrate adequate investigation to satisfy the
Commission, it is unlikely for a small scheme that any complainant
would then invest further money in seeking to challenge a
Commission ruling.

As State aid issues are becoming increasingly
more important for local authorities we are holding a seminar
to discuss them. The specific date for the seminar has
not yet been announced but it will take place within October
so if you find this article interesting please email events@bevanbrittan.com
to get more information about it.

Nov 10 2017

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The information on this website is of general interest about current legal issues and is not intended to apply to specific circumstances. It should not, therefore, be regarded as constituting legal advice.